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Santos Says LNG Project Budgets Unchanged, Won’t Need Share Sale

Feb. 22 (Bloomberg) -- Santos Ltd., Australia’s third-biggest oil and gas producer, said the $18.5 billion Gladstone liquefied natural gas project is on budget and it won’t need to sell shares to raise funds.

The cost estimates are unchanged for the GLNG venture in Queensland state and a $19 billion LNG development in Papua New Guinea operated by Exxon Mobil Corp., Adelaide-based Santos said today in a statement as it reported a 34 percent gain in full-year profit excluding one-time items.

The shares rose 1.3 percent to A$12.05 in Sydney trading, while the benchmark index climbed 0.8 percent.

While the unchanged costs for the natural gas projects are a positive for Santos, further budget overruns “remain inevitable,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in a note today.

Santos said full-year profit dropped 31 percent to A$519 million from the previous year after one-time gains weren’t repeated. Excluding one-time items, profit was A$606 million.

Origin Energy Ltd. yesterday boosted the cost estimate for its Australia Pacific liquefied natural gas project in Queensland state by 7 percent to A$24.7 billion.

Santos’s operations include the Fletcher-Finucane oil project in the Carnarvon Basin off Western Australia, the Chim Sao oil field in Vietnam and assets in central Australia’s Cooper Basin. First oil from Fletcher-Finucane is now expected ahead of schedule by mid-2013, Santos said today.

Santos doesn’t plan to sell any infrastructure assets such as pipelines connected to the GLNG venture, Chief Financial Officer Andrew Seaton said today on a call with analysts.

Sydney-based Origin may sell infrastructure linked to its neighboring Australia Pacific LNG project on the Queensland coast, Managing Director Grant King said yesterday.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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